[SMM Stainless Steel Daily Review] SS Futures Held Up Well; Spot Prices Remained Stable, with Just-in-Time Procurement Dominating

SMM News on March 12: SS futures held up well in a sideways pattern. As geopolitical tensions in Iran continued to escalate and the US resumed its tariff war, macro news still had a significant disruptive effect on futures, and SS futures had yet to show a clear direction, closing at 14,245 yuan/mt by the midday break. In the spot market, affected by the rangebound movement in futures, spot quotations remained stable. Although the market had entered the traditional peak consumption season and downstream demand recovered somewhat, expectations of high supply capped the market, limiting acceptance of high-priced cargoes. Downstream buyers mainly made just-in-time procurement, while traders actively shipped goods to reduce inventory.

The most-traded SS futures contract fluctuated higher. At 10:15 a.m., SS2605 stood at 14,290 yuan/mt, up 170 yuan/mt from the previous trading day. Spot premiums for 304/2B in Wuxi were in the 230-430 yuan/mt range. In the spot market, Wuxi cold-rolled 201/2B coils all remained stable; for cold-rolled trimmed 304/2B coils, average prices in both Wuxi and Foshan were steady; cold-rolled 316L/2B coils in Wuxi held steady; for hot-rolled 316L/NO.1 coils, Wuxi quotations remained stable; and cold-rolled 430/2B coils in both Wuxi and Foshan were unchanged.

As the market entered the traditional peak consumption season of "Golden March and Silver April," the stainless steel market entered a window for demand recovery. On the downstream side, operations gradually resumed after the Chinese New Year holiday, and demand showed a gradual recovery trend. However, although transactions improved from the previous period, the usual peak-season briskness had yet to emerge, with end-users mainly making just-in-time procurement and showing low willingness to stockpile. On the futures side, safe-haven demand driven by geopolitical conflicts supported a stronger US dollar, which restrained the upward momentum of SS futures. This week, the overall market mainly fluctuated in a range and failed to form a sustained upward trend. On the inventory side, stainless steel social inventory did not accumulate further this week, but remained at a high level overall, and heavy inventory pressure constrained the market. Although inventory did not continue to increase, high inventory levels combined with weaker-than-expected demand recovery meant destocking pressure persisted, and traders maintained a cautious pace of shipments. Supply side, steel mill maintenance-related production cuts in February had fully ended, and March production schedules rose sharply, significantly releasing pressure from additional supply. In the face of supply pressure, steel mills mainly focused on stabilizing prices while actively shipping goods, proactively controlling price fluctuations and accelerating inventory turnover to ease supply-side pressure, but expectations of oversupply still weighed on the market. Cost support remained strong, with the impact of news from Indonesian nickel ore still lingering. Nickel ore prices held up well, pushing up NPI production costs, while high-grade NPI prices rose steadily. Stainless steel mills currently had narrow profit margins and limited acceptance of high-priced NPI. Although transactions in high-grade NPI were relatively sluggish this week, bullish sentiment in the NPI market remained strong, low-priced cargoes were hard to find, and the cost side effectively restrained downside in stainless steel prices. Overall, the stainless steel market this week showed the core features of “rising supply, weak demand recovery, strong cost support, and elevated inventory,” with the key contradiction being the mismatch between supply growth and the pace of demand recovery. Although peak-season expectations remained and cost support was strong, the increase in supply, inventory at high levels, and weaker-than-expected demand recovery led to waning market confidence. The current focus is on the progress of demand recovery, inventory digestion capacity, and steel mill shipments. Going forward, close attention should be paid to demand release, inventory drawdown, and changes in nickel ore prices to assess the market trend.